July 27 (Bloomberg) -- The Federal Election Commission
today said that it would require groups funding issue ads, such
as the U.S. Chamber of Commerce and Crossroads GPS, to disclose
their donors.

The FEC ruling applies only to what are known as
“electioneering communications,” so-called issue ads that run
before an election and mention a federal candidate without
urging viewers to vote for or against the person. “Independent
expenditures,” which advocate support or opposition to a
candidate, aren’t affected by the FEC decision.

The commission said all groups should report donors of
$1,000 or more effective March 30. That’s when a U.S. District
Court judge threw out FEC rules allowing groups to hide their
contributors. The case was brought by Representative Chris Van
Hollen, a Maryland Democrat, who argued that the 2002 campaign-finance law required such disclosure.

“This lawsuit is one step forward in our fight to restore
the integrity of our electoral process, and will shine an
important light on some of the shadowy money that has flooded
our elections,” Van Hollen said.

In an interview, Paul Ryan, a member of Van Hollen’s legal
team, said: “It’s about time that the FEC made clear its
understanding of its obligation to enforce the law as it is
written in the statute.”

Legal Appeal

That district court ruling has been appealed, and the FEC
said it could reverse its policy if a higher court overturns the
decision. A phone calls to the Chamber wasn’t immediately
returned.

“The FEC statement is not new policy, but rather
reiterates the Van Hollen decision,” said Jonathan Collegio, a
Crossroads spokesman. “Crossroads is aware of the rules and is
careful to follow them closely.”

Organizations can get around the FEC ruling and continue to
hide their donors if they fund “independent expenditures,”
which advocate directly for or against a particular candidate.

That’s because when the 2002 law was written, independent
expenditures could be funded only by groups reporting donors and
spending. Subsequent court decisions allowed corporations and
unions to fund such expenditures without disclosing donors.

Millions Spent

Crossroads GPS, the nonprofit founded with help from
Republican strategist Karl Rove, and the Chamber, the largest
U.S. business lobby, have spent millions of dollars to help
elect Republicans without identifying the sources of their
money. This year, the Chamber has spent $3.3 million and
Crossroads $286,810 on electioneering communications, FEC data
shows.

Today’s commission action affects all issue ads airing 60
days before the general election or 30 days before a primary
election or the national political conventions. The ads
typically urge viewers to call their lawmaker and express
support or opposition on an issue. For instance, a recent
Crossroads ad urges viewers to tell President Barack Obama that
“for real job growth, cut the debt.”

Senate Republicans twice this month blocked legislation to
require all groups attempting to influence the outcome of
elections to identify their donors, no matter what is in their
ads.